Binance has been accused by the Commodity Futures Trading Commission (CFTC) of allowing trading firms based in the US to trade crypto derivatives on Binance’s international exchange.
Allowing US-registered firms access to a derivatives platform meant for international users is a clear subversion of Binance’s own policy, which does not allow any Americans to trade on Binance.com.
According to the CFTC, the US firms used offshore entities and various other methods to gain access to Binance.com. However, the regulator also argued that Binance intentionally allowed this to happen.
To serve US traders, Binance has set up Binance.US, which operates as a separate crypto exchange that – at least according to Binance – complies with US regulations.
Allegations come to light from the CFTC Lawsuit against Binance Filed on Monday this week.
Within seven days of the lawsuit, Binance saw net withdrawals of some $2.2 billionJoe in CZ A do Described as “a bit of a pure outcast”.
Fast trade execution for VIP
In addition to accusing Binance of allowing US traders on its international platform, the CFTC also said in the lawsuit that Binance gave benefits in the form of faster trade execution to some of its largest VIP customers.
In one instance, the CFTC alleged that Binance gave a New York-based trading firm with VIP status a 5 to 10 millisecond advantage over non-VIP clients. The firm was not named, but was referred to as “Trading Firm B” and was said to be one of Binance’s largest customers.
while commenting On Thursday’s Wall Street Journal disclosure, Joe Saluzzi, a partner at stock brokerage Themis Trading, explained that this type of leverage can be used by a client to make more money at the expense of others.
“If I were one of their other customers, I would be a little upset,” he said.
“Unexpected and Disappointing” Lawsuit
Binance CEO Changpeng Zhao has not specifically commented on allegations that US traders were allowed on Binance.com. However, he called the lawsuit “unexpected and disappointing,” while adding that his firm has “worked closely with the CFTC for more than two years.”
“Upon preliminary review, the complaint contains an incomplete text of facts, and we do not agree with the characterization of several issues alleged in the complaint,” CZ wrote in a statement Published on Binance’s website.